All The Subtle Ways

I wanted to say the same thing, but didn’t know how. Luckily, Scott Sumner does:

One thing that bugs me is economists who seem to think that their way of looking at life is the right way. Indeed the only sensible way.

1. Economists who complain that Christmas presents are inefficient.

Do they ever consider the fact that people might get utility from the thought that others are thinking about them? You don’t have to think about someone else to give them money, whereas you do have to try to think about their preferences if you give them a gift.

2. Economists who complain that buying lottery tickets is foolish.

Do they ever consider that people with dreary lives might get utility from buying a little bit of hope for the future? I seem to recall a study that suggested that people with unrealistic expectations about the future are happier.

I don’t want to quote his line on smoking, which is point no.3.

I like the p.s. he adds too:

PS. This is my biggest problem with behavioral economics. The field has certainly produced some interesting results, but at times it seems like the practitioners are over-confident about their ability to second guess the decisions of people they have never even met.

PPS. And I think the problem goes far beyond behavioral economics. I often find it hard to even have a conversation with my fellow economists. Sometimes their views on “scientific” methodology are so narrow that any claim that doesn’t fit some arbitrary mathematical model is ruled out of order. Or the failure to follow some arbitrary testing procedure results in claims being ignored. Or vast consequences are assumed to flow from whether a statistical test yields a “significant” result.

“A new idea is delicate. It can be killed by a sneer or a yawn; it can be stabbed to death by a quip and worried to death by a frown on the right man’s brow.” – Ovid.

bene qui latuit, bene vixit.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s